A startup should typically initiate a round of Series A funding once it can offer investors a proven business model with a clear value proposition. It should have a solid grasp on key components of its business model, including its potential market and what price point at what price point it will sell its products or services.
Series A investors look to fund startups with a promising outlook. As such, startups can attract Series A investors by demonstrating the traction that their product or service has already gained. For example, they may have a fast-growing user base or steadily increasing revenue.
So unless a startup can instill confidence in potential investors that their investment will be worthwhile, it may be best to hold off on initiating this round of funding.
Prior to Series A funding, many startups engage in a round of funding known as seed funding or seed money. The money raised in this round of funding aims to support a startup during its infancy. A startup may also choose to initiate a round of funding before seed funding called pre-seed funding. This round of funding typically comes from the startup founders themselves.
If a startup wishes to continue with funding rounds after completing Series A funding, it can progress to Series B funding and possibly Series C funding. Series B funding is focused on propelling the startup to the next level, while Series C funding is concerned with scaling the business even more rapidly. It is by no means necessary to initiate further rounds of funding — some startups may choose to start and end their funding with Series A funding.
If a startup finds success with funding rounds, it may choose to go on to Series D and Series E funding. In rare cases of extreme success, it may choose to proceed to Series F and Series G funding.
